Abrupt Change of Authoritarian Regimes.

by Dr. Gary S. Becker.

Gary Becker.

The Tunisian and Egyptian political eruptions were pretty much totally unexpected by the governments of the United States and of other countries, and by the vast majority of experts on Egypt and the Islamic world. To be sure, experts were aware that the government of say Egypt was not popular among many segments of the population, including The Muslim Brotherhood, most intellectuals, and many members of the growing middle class. However, the timing and speed of the uprising there (and in Tunisia) was rather a complete surprise since Mubarak and Ben Ali were in power for over 20 years, and seemingly in rather complete control.

I was first impressed by the unexpected and speedy nature of the overthrow of authoritarian regimes in 1979 when a combination of religious and leftwing groups forced the Shah of Iran from power. Until very close to the end he looked invulnerable: he seemed to be in full control of a strong and well-equipped army, and had an active and dreaded secret police, the SAVAK, that imprisoned anyone who vocally attacked the government. That the overthrow was unexpected is objectively measured by the stability of the international value of the Iranian currency, the rial, until just a few weeks before the Shah was ousted. Had the overthrow been anticipated, the value of the currency would have plunged as Iranians and others tried to get out of rials into dollars and other hard currencies. The rial did plunge in value shortly after the revolution appeared to be succeeding.

The rapid disintegration of the Soviet Union is another telling example. In 1989 my wife and I took a train from West Berlin through East Germany to go to Warsaw. The customs agents in East Germany were unpleasant, and the East German government headed by Erich Honecker seemed totally in charge. Much to my surprise, less than six months later, close to one million younger men and women were demonstrating in the streets, and the government was soon quickly gone, along with most of the Russian empire.

The unexpected nature and the speed of the overthrow of these and other authoritarian regimes is what is so glaring and challenging to theories of authoritarian rule. Analytically, what happens is that over time such a regime may be shifting in unnoticed ways from stable equilibrium positions, where the government is in rather complete control, to an unstable equilibrium where seemingly small events trigger massive changes, including the ouster of the government. The overthrow of the government may be quick and without much violence, as in the East German and Tunisian cases, or involve considerable violence, as during and especially after, as in the Iranian revolution.

Such unstable equilibria are sometimes called "tipping points". This term was first used to describe rapid changes in housing neighborhoods from being mainly white and Christian to "tipping", and then rapidly becoming mainly black or Jewish. A neighborhood may remain basically say all white until a few black families move in. If more black households move in over time, their fraction may become large enough that many white residents begin to panic, and put their houses up for sale. After that the neighborhood quickly "tips" into becoming a mainly black neighborhood.

The basic underlying reason that authoritarian regimes fall quickly, with or without violence, is that, as Posner emphasizes, they do not have any natural succession process. A strong man like Mubarak would be in power, but as he ages and gets weaker who is to succeed him? His son or confidants? Opposition groups may begin to see opportunities, or the unhappiness and frustration of young people and others may spontaneously erupt into mass demonstrations, as in Egypt, or in Iran after frustration over the outcome of the presidential elections two years ago. Sometimes these demonstrations succeed, as in Tunisia and apparently now in Egypt, and sometimes they fail, as in Iran after those elections, and in the 1989 Tiananmen Square demonstrations in China.

Will similar demonstrations spread to the rest of the Arab world in North Africa and the Middle East that without exception have non-democratic regimes? Already the Jordanian government and a few others have started to make concessions to the opposition, including giving greater representation to various disaffected groups. I do not know how many of these governments will change radically and speedily. The theory offers little guidance on the timing of major political changes, but I do believe that large changes in this region toward freer elections and greater representation will occur before very long.

The Internet, Facebook and other online social networks, are changing the dynamics of the political landscape in all countries, including Islamic countries. In addition, the middle classes are growing in importance throughout Middle East and North Africa. As a result, these countries will experience the same aspirations for greater freedom of expression and greater representation in the government, as is found in other parts of the world. Eventually, these aspirations will force a conversion of the political institutions of these Islamic countries into something that may not be the same as Western democracies, but will offer more contested elections, greater political and social freedoms, and probably also greater economic freedom.

About Gary Becker:
Dr. Gary Becker is a University Professor, Department of Economics, and Sociology Professor, Graduate School of Business, The University of Chicago. He won the Nobel Prize in Economics in 1992 for his groundbreaking work in "human capital." President George W. Bush awarded him the Presidential Medal of Freedom in 2007.

To keep track of Dr. Becker's continuing research and commentary, visit his website and blog.

$100/Barrel Oil Fuels Interest in Clean Energy (Again).

by Natalie Pace.

Includes a Solar Energy Stock Report Card.

The only good thing about $100/barrel oil is that it makes clean energy look cheap. Greenies have been on the bandwagon of solar, wind, geothermal, electric cars and recycling since before President Jimmy Carter, but for the stalwart capitalist, you catch his attention when you hit him directly in the wallet. So, everyone is more green today than they were a month ago before the sociopolitical meltdown in dictatorial Gulf countries like Libya and Egypt.

Ah. Reminds me of 2007, when clean energy was the top performing industry, hotter than gold or oil and attracting all of the investment capital. In 2007, clean energy outperformed every other industry, with 60% gains -- almost double the returns of the second highest performing industry, oil and gas, at 32 cents return on investment.

Returns of Clean Energy and Oil in 2007

Source: Money.MSN.com (for illustration purposes only)

Yes, you read right. The last time clean energy heated up was under the reign of good ole George W. – not of course due to the President’s focus on renewable energy, but rather, due to the people’s alarm at oil prices, which were approaching an all-time high of $80/barrel. U.S. consumers cut back on their commute, opted for fuel efficient vehicles, made Toyota (maker of the Prius) the number one car company, and gloated about their return on investment in publicly traded clean energy companies.

Crude Oil Prices 1869 to 2009

Source: WTRG.com

Of course, $80/barrel became the new norm, clean energy crashed in 2008 (with the onset of the Great Recession) and now we have to hit $111/barrel for U.S. citizens to become alarmed again. However, here we are. This may be the first article to alert you to the sizzle factor of solar in 2010, but it is likely the first of many, if the situation in the Middle East continues to deteriorate.

During the Great Recession, President Obama’s Stimulus Bill helped American clean energy companies compete with China and return to cash positive operations. Many clean energy companies returned to profitability in 2010 (after a dismal 2008 and 2009). This article focuses on three leading companies in the solar energy sector, MEMC Electronics (which owns SunEdison), Satcon (maker of solar grid converters) and LDK Solar (a vertically integrated solar energy company, based out of China, but incorporated in the Cayman Islands). Click here to review the Solar Energy Stock Report Card, which lines up key data on each of these three companies.

Satcon produces the solar energy grid converter of choice for PG&E, Bank of America, Chevron, Google, Suntech, SunEdison (owned by MEMC Electronics) and more. In the 4^th quarter of 2010, Satcon’s revenue more than tripled over the prior year, at $72.6 million versus $21.5 million in 2009. Steve Rhoades, Satcon’s President and Chief Executive Officer, reports, "In addition to achieving our revenue targets, we improved gross margin in each quarter, and posted an operating profit for the last two consecutive quarters of the year — both milestone achievements for the company."

Satcon’s revenue continues to look strong for 2011 as well. Bookings for the full year 2010 totaled $288.6 million, an increase of 454% over 2009.  For the fourth quarter of 2010, new bookings totaled $89.1 million. At December 31, 2010, the company’s backlog was $102.8 million.  Backlog from North America represented 79% of orders.  Asia contributed 17%, while Europe ordered 5%. If Congress kills stimulus funding, however, this could severely impact the North American orders, something for investors to be keenly aware.

Satcon’s sales are driven by the North American utility-scale market. As the industry moves away from putting solar panels on every roof and toward powering the grid with renewables, Satcon could continue to experience backlogs in the hundreds of millions. With vertical integration as the new buzz word in business, Satcon might also become a takeover target by any one of its larger partners.

MEMC Electronics, based out of St. Peters, MO, has been on a buying spree lately. The company began as a manufacturer of silicon wafers for the solar industry, and with the purchases of SunEdison and Solaicx Inc., has moved into the solar materials and energy businesses as well. MEMC’s revenue was $2.2 billion in 2010, and 2011 is on track to increase revenue by 50% or more.

SunEdison builds and powers solar farms for utilities and large businesses, while MEMC continues to expand its presence in wafers and materials. On February 15, 2011, MEMC Electronics announced a 50/50 joint venture with Samsung Fine Chemicals to build and operate a polysilicon plant in Korea. SFC's core competence is in chlorination processes and high purity purification technology. MEMC is a world leader in semiconductor and solar technology, with over 50 years of expertise in polysilicon and wafers.

The new Korean JV with Samsung should start adding to the top line of MEMC in 2013, and in the meantime, MEMC just raised capital through a new bond issuance for the project. On February 23, 2011, the company announced an offering of new senior unsecured notes due 2019.

As for LDK Solar, this company is the biggest rollercoaster of the three. The share price sank like a rock between 2008 and 2010, from a high of $77/share to a low of $4.97/share. On the one hand you have impressive earnings growth, and on the other, the highest debt to GDP ratio of the three companies. LDK Solar’s Chairman and CEO Xiaofeng Peng is a favorite among his peers, and was awarded the 2010 China Business Leaders CEOs’ Award and "The Most Admired Entrepreneur of 2007" award. However, there have been numerous concerns and issues with investors, staff and customers over the years, and the company may need to spend almost $400 million on April 15, 2011 to pay off debt. With corporate headquarters in the Cayman Islands and main offices in China, information on this company is always more difficult to stay abreast of.

MEMC was most recently featured at $11.00/share (on February 1, 2011) in the Hot News on Cool Stocks List. Satcon was added today to the Hot News on Cool Stocks list. News of Satcon’s explosive earnings report, which was released on February 22, 2011, could spark investor interest and share price gains, even in a volatile environment. LDK Solar, as a higher risk investment with a big issue to deal with in the near future, will not be highlighted, though it continues to remain on my Hot List, anticipating that the share price may gain if the Wall Street Spring Rally continues.

About Natalie Pace:
Natalie Pace is the author of You Vs. Wall Street. She is a repeat guest on Fox News, CNBC, ABC-TV and a contributor to HuffingtonPost.com, Forbes.com, Sohu.com and BestEverYou.com. As a philanthropist, she has helped to raise more than two million for Los Angeles public schools and financial literacy. Follow her on http://www.facebook.com/NWPace, and on YouTube.com/NataliePaceDOTCOM. For more information please visit, http://www.nataliepace.com.

Please note: NataliePace.com does not act or operate like a broker. We report on financial news, and are one of the most trusted independently owned and operated financial news corporations in the U.S. This article is intended to educate and inform individual investors, and, thus, to give investors a competitive edge in their personal decision-making. The publicly traded companies mentioned in this article are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies.   Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a long, safe strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

Information has been obtained from sources believed to be reliable however NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.

Why NASDAQ is Doubling the Dow in Gains (and Will Continue To).

by Natalie Pace.

Apple and Google are much healthier than the corporations in the "leading Blue Chip Index." Learn why.

In 2010: Small beat large. Growth beat value. NASDAQ outscored the Dow Jones Industrial Average (with double the gains since 2009). Bonds lost money. And believe it or not, there is one single word that explains it all: debt. And debt is likely to continue to be the biggest story in 2011, too. Understanding this underlying factor and how to use it to examine your investments can mean a huge increase in your return on investment, especially now, at the beginning of the Spring Rally. 

NASDAQ Gains since January 1, 2009, Compared to the Dow Jones Industrial Average and the S&P 500

Source: Money.MSN.com, for illustration purposes only

Large cap value, in particular, was one of the worst places to be during the Great Recession, and going forward, because the legacy Blue Chips are carrying the highest debt, pension and Other Post Employment Benefit obligations (OPEBs). Automakers and airlines used the bankruptcy courts to restructure their unsustainable debt, bonds and pension obligations.

On the other hand, many of the growth stocks, even the large ones like Google and Apple, have very little debt and far fewer labor obligations. It’s important to realize that the few corporations in the most indebted (and therefore vulnerable) industries (like Ford Motor Company) that "survived" without bankruptcy restructuring are not in much better fiscal health than those that restructured (like General Motors and Chrysler). Earnings reports can still report a profit, even when the debt is 3-4 or more times more than the value of the company, so investors cannot simply rely upon headlines and press releases. They must know the actual debt of the corporation (or municipality) to understand just how vulnerable their investment is to decline or default.

1980 was a pivotal year for corporations. When President Ronald Reagan took office, corporations began offering employee-directed retirement plans (401K, IRAs, etc.) instead of defined benefit plans and pensions. This is why the Dow Jones Industrial Average, with its concentration of large, older companies has so many debt-laden corporations, while the NASDAQ composite index, with Google, Apple and the majority of the younger, newer, leaner companies, have very little or no debt and tens of billions of unencumbered cash on hand. As you can see in the graph below, smaller companies, growth companies, technology and emerging markets were the best places for returns in 2010. Wall Street ran a similar track in 2009, with even more robust gains.

Top Performing Funds of 2010

Source: 2011 © Morningstar, Inc.

Bonds
Corporate bonds. In a world that has seen the bankruptcies of GM, Chrysler, United, Delta, U.S. Air, Washington Mutual, Lehman Bros and more, corporate bonds must be evaluated individually and forensically to determine the risk, with an eye on the debt, the income and the revenue growth trend. A very high debt to equity ratio, low profit margins and negative growth is a recipe for disaster, even if the company name has been beloved for over a century. Some companies and municipalities are issuing new bonds every year to try and cover the operating deficit.

Worst Performing Funds

Source: 2011 © Morningstar, Inc.

Muni bond funds were the worst area of the market to be in, and that is likely to accelerate in 2011, as debt continues to dominate the headlines. As Ted Hampton, an analyst at Moody’s says, "In some cases pension liabilities have become more pronounced and unmanageable. In Illinois, they literally can’t pay for them. They are issuing bonds two years in a row." The higher the interest offered, the higher the risk. So, don’t be lured into purchasing a triple tax free muni fund, when the bond itself might become illiquid and lose value. When investors lose faith, the underlying value of the bond and bond fund can drop like an anvil. We saw a small sample of that in November of 2010, when austerity measures in New Jersey, Illinois, Wisconsin and other states stunned Americans and muni bond funds dropped 15%.

Source: Money.MSN.com. For illustration purposes only.

For more information on how to evaluate bonds, on where to invest your "safe" liquid money and how to profit in 2011, read the following articles. Another great source for information on bonds and bond funds is FINRA.org.

"Don't Get Fooled Again," from Sept. 2010 ezine, vol. 7, issue 8.
"Latin America Funds Doubled," from August 2010 ezine, vol. 7, issue 8.
"Hot Funds of Summer," from July 2010 ezine, vol. 7, issue 7.
"Bond Beautification Project.  What Should You Do With Your Bonds?" from October 2010 ezine, vol. 7, issue 10.
"The Gold Crash of 1980." from September 2010 ezine, vol. 7, issue 9.
"2010 Company of the Year," from December 2010 ezine, vol. 7, issue 12.
"Debt World," from February 2011 ezine, vol. 8, issue 2.
"13 Out of 14 Winners," from January 2011 ezine, vol. 8, issue 1.

NASDAQ, the Star of Wall Street
As you can read in my article from November 2006 (volume 3, issue 11), the trend of NASDAQ beating the DOW handily was already visible in the crystal ball five years ago. Check out the headline article in the February ezine entitled, "Big Bites Out of Apple and Google" for an updated analysis of NASDAQ versus the DJIA.

So, when you think about America these days, the country is divided into those companies founded after 1980 and those founded before. There are legacy promises that corporations and municipalities made to their retirees that they are struggling to keep. As a society, we’ll have to deal with this. As an investor, you should be aware that not all companies and states are created equal, and bet your bottom dollar on companies that are able to operate a business in the competitive marketplace of a global economy.

About Natalie Pace:
Natalie Pace is the author of You Vs. Wall Street. She is a repeat guest on Fox News, CNBC, ABC-TV and a contributor to HuffingtonPost.com, Forbes.com, Sohu.com and BestEverYou.com. As a philanthropist, she has helped to raise more than two million for Los Angeles public schools and financial literacy. Follow her on http://www.facebook.com/NWPace, and on YouTube.com/NataliePaceDOTCOM. For more information please visit, http://www.nataliepace.com.

Please note: NataliePace.com does not act or operate like a broker. We report on financial news, and are one of the most trusted independently owned and operated financial news corporations in the U.S. This article is intended to educate and inform individual investors, and, thus, to give investors a competitive edge in their personal decision-making. The publicly traded companies mentioned in this article are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies.   Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a long, safe strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

Information has been obtained from sources believed to be reliable however NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.

Should You Sell Your Company?

by Ben Horowitz. Business Tips from a Billion Dollar CEO.

Sittin’ up drunk shuffling thoughts
Got paper but I’m lost
Losing focus what a n#%$a still hustlin’ for?
My seed is straight the family’s settled
Idle time get the man in trouble
—Nas, Suicide Bounce

Artist: Nas
Track: "Suicide Bounce"
Album: Street’s Disciple
Released: 2004
Label: Ill Will, Columbia

Ben Horowitz.

One of the most difficult decisions that a CEO ever makes is whether or not to sell her company. Logically, determining whether selling a company will be better in the long term than continuing to run it stand-alone involves a huge number of factors, most of which are speculative or unknown. And if you are the founder, the logical part is the easy part.

Indeed, the task would be far simpler if there were no emotion involved. But selling your company is always emotional and deeply personal.

Types of Acquisitions
For the purpose of this discussion, it is useful to think about technology acquisitions in 3 categories:

1. Talent and/or Technology—when a company is acquired purely for its technology and or its people. These kinds of deals typically range between $5 and $50M.

2. Product—when a company is acquired for its product, but not its business. The acquirer plans to sell the product roughly as it is, but will do so primarily with its own sales and marketing capability. These kinds of deals typically range between $25M and $250M.

3. Business—when a company is acquired for its actual business (revenue and earnings). The acquirer values the entire operation (product, sales, and marketing) not just the people, technology, or products. These deals are typically valued (at least in part) by their financial metrics and can be extremely large (e.g. Microsoft’s $30B+ offer for Yahoo!).

This post is most applicable to business acquisitions with some relevance to product acquisitions and will be fairly useless if you are selling people and/or technology.

The Logical
When analyzing whether or not you should sell your company, a good basic rule of thumb is:

If:
a) You are very early on in a very large market
AND
b) You have a good chance of being number 1 in that market

then you should remain stand-alone. The reason is that nobody will be able to afford to pay what you are worth, because nobody can give you that much forward credit. For an easy to understand example, consider Google. When they were very early, they reportedly received multiple acquisition offers for more than $1B. These were considered very rich offers at the time and they were being offered a gigantic multiple. However, given the size of the ultimate market, it did not make sense for Google to sell. In fact, it didn’t make sense for Google to sell to any suitor at any price that the buyer could have paid. Why? Because the market that Google was pursuing was actually bigger than the markets that all of the potential buyers owned and Google had built a nearly invincible product lead which enabled them to be number 1.

Contrast this situation with Pointcast. Pointcast was one of the first Internet applications to catch fire. They were the buzz of Silicon Valley and the technology industry in general. They received billion dollar acquisition offers that they passed on. Then, due to flaws in their product architecture, their customers started to turn off their application. Overnight, their market collapsed and never returned. They were ultimately sold for a relatively tiny amount.

So, the judgment that you have to make is a) is this market really much bigger (more than an order of magnitude) than has been exploited to date? b) Are we going to be number 1? If the answer to either a) or b) is no, then you should consider selling. If the answers to both are yes, then selling would literally mean selling yourself and your employees short.

Unfortunately, these questions are not as simple to answer as I’ve made them out to be. In order to get the answer right, you also have to answer the question: "What is the market really and who are the competitors going to be?" Was Google in the search market or the portal market? Clearly, in retrospect, they were in the search market. Most people thought they were in the portal market at the time. Yahoo was a tough competitor in the portal market, but not so much in the search market. If Google had really been in the portal market, then selling might have been a good idea. Pointcast thought that their market was much larger than it turned out to be. Interestingly, Pointcast’s own product execution (or lack thereof) caused their market to shrink.

Let’s look at the case of Opsware. Why did I sell Opsware? Another good question is why didn’t I sell Opsware until I did?

At Opsware, we started in the Server Automation market. When we received our first inquiries/offers for the Server Automation company, we had less than 50 customers. I believed that there were at least 10,000 target customers and that we had a decent shot at being number 1. In addition, although I knew the market would be redefined, I thought that we could expand to networks and storage (Data Center Automation) faster than the competition and win that market as well. Therefore, assuming 30% market share, somebody would have had to pay 60X what we were worth in forward credit to buy out our potential. You won’t be surprised to find that nobody was willing to pay that.

Once we grew to several hundred customers and expanded into Data Center Automation, we were still number 1 and were more valuable stand-alone than any of the prior acquisition offers. At that point both Opsware and our main competitor Bladelogic had developed into full-fledged companies (world-wide sales forces, built out professional services, etc). This was significant, because it meant that a large company could buy one of us and potentially execute successfully (big enterprise companies can’t generally succeed with small acquisitions, because too much of the important intellectual property is the sales methodology and big companies can’t build that).

At this point, it became clear that BMC was going to buy either Opsware or Bladelogic. As a result, the calculus, as to whether Opsware was going to be number 1 in the market needed to be redefined as follows:

1. We had to be number 1 in the Systems & Network Management market rather than the Data Center Automation market, because like the word processor market, the Data Center Automation market was going to be subsumed by a larger market that contained it.
2. In order to be number 1, we had to beat BMC+Bladelogic which was a significantly more difficult opponent than either company stand-alone.

Finally, the market itself was transforming due to an underlying technological shift: virtualization. Virtualization meant that the entire market needed to be re-tooled, so we were embarking on a new R&D race to build the best management for virtualized environments. This meant deferring earnings for a very long time.

Based on all of these factors, it made sense for us to at least consider the possibility of acquisition and run a short process to understand the interest in the M&A market. Through that process, 11 companies made acquisition offers of some form. This told me that we were at a local maxima in terms of the market price for Opsware. I.e., the set of potential buyers was convinced that the market was very important and there was no extra premium that we could hope to achieve through better awareness.

In the end, based on a lot of analysis and soul searching, I determined that the current local maxima was higher than we could expect to achieve in the next 3-5 years and I sold the company to Hewlett Packard for $1.65B. I think and hope that was the right decision.

The Emotional
The funny thing about the emotional part of the decision is that it’s so schizophrenic.

How can you ever sell your company after you’ve personally recruited every employee and sold them on your spectacular vision of a thriving, stand-alone business? How can you ever sell out your dream?

How can you walk away from total financial independence for yourself and every member of your close and distant family? Aren’t you in business to make money? How much money does one person need?

How can you reconcile Dr. Stay-the-Course and Mr. Sell-the-Thing? Clearly they are irreconcilable, but the key is to mute them both.

A few keys on muting the emotions:

• Get paid (a salary)—Most venture capitalists like entrepreneurs that are "all in", meaning that the entrepreneur has everything invested in the company and will have very little to show for her efforts if the company does not succeed.  As part of this, they prefer that the founding CEO have a very low salary. In general, this is a good idea, because the temptation to walk away when things go poorly is intense and total financial commitment helps one keep his other commitments. However, once the company starts to become a company rather than an idea then it makes sense to pay the CEO at market. More specifically, once the company has a business (as defined above) and becomes an attractive acquisition target, it makes sense to pay the CEO, so that the decision to keep or sell the company isn’t a direct response to the CEO’s personal financial situation as in: "I don’t think that we should sell the company, but I live in an 850 square foot apartment with my husband and two kids and it’s that or divorce."
• Be clear with the company—One question that every start-up CEO gets from her employees is: "Are you selling the company?" This is an incredibly difficult question. If she says nothing, the employee will likely interpret this to mean the company is for sale. If she says "at the right price," the employee will wonder what that price is and may even ask. If the company ever reaches that price, the employee will assume the company will be sold. If she dodges the question with the standard "The company is not for sale," the employee may feel betrayed if the company is ever sold. More importantly, the CEO may feel like she is betraying the employee and that feeling will influence her decision making process. One way to avoid these traps is to describe the analysis in the prior section: if the company achieves product/market fit in a very large market and has an excellent chance to be number 1, then the company will likely remain independent. If not, it will likely be sold. This is one good method to describe the interests of the investors in a way that’s not at odds with the interests of the employees and is true.

Final Thought
When faced with the decision of whether or not to sell your company, there is no easy answer. However, preparing yourself intellectually and emotionally will help.

About Ben Horowitz
Ben Horowitz is the cofounder and General Partner (along with Marc Andreessen) of the venture capital firm Andreessen Horowitz based in Menlo Park, California. Ben was CEO of LoudCloud (a cloud service provider), which became Opsware, and then sold to Hewlett-Packard for $1.65 billion.

Food Chain: Do Spiking Food Prices Warn of Generalized Inflation?

by Liz Ann Sonders, Senior Vice President, Chief Investment Strategist, Charles Schwab & Co., Inc.

February 14, 2011

Key points

• Food inflation heats up and incites global unrest.
• But for now, it's unlikely to become a monetary phenomenon.
• Investors should expect geopolitical risk to stay elevated in 2011, with implications for emerging markets performance.

Liz Ann Sonders.

Inflation is back as a big concern … for some it never waned. The subject has headlined many of my reports during the past couple of years; since the Federal Reserve began pumping unprecedented sums of liquidity into the financial system in 2008.

Recently, it's the shocking spike in food and, to a lesser degree, energy prices that has elevated the worries again that "core" (excluding food and energy) inflation will follow.

The recent troubling spike in food inflation, seen in the chart below, has its roots in major supply disruptions caused by extreme weather conditions in many of the largest food producing countries. But it's also a function of booming emerging economies and the rise of their consumer population.

Skyrocketing Food Prices

Source: Commodity Research Bureau (CRB) and FactSet, as of February 11, 2011.

Geopolitical implications
Rapidly rising inflation can be toxic not only to economies, but to profit margins and stock market valuations, as well. It's also becoming toxic to the social fabric in countries where food is a large portion of consumers' expenditures, like in emerging Asia (see chart below).

Unless food and fuel prices begin to ease, there are implications for Asia's debt outlook and also for leaders hoping to prevent another Egyptian-style uprising; which had at its roots in unrest about food prices and unemployment.

Emerging Economies' Food Consumption

Source: Wolfe Trahan & Co. Portfolio Strategy, as of February 14, 2011. Chart uses region average.

The United Nations estimates that countries spent at least $1 trillion on food imports last year, with the poorest nations paying about 20% more than in 2009. Asian governments are expected to increase subsidies and cut import taxes, with potential important fiscal implications. This is on top of the social instability risks that the world watched in Egypt during the past several weeks.

Unlike the commodity price spike in 2008, that had a large speculative component to it, this one appears to be less cyclical and more secular. Asia's diet is becoming more Western, with a greater focus on dairy and livestock, and less focus on its historic staples.

Rising commodity prices are making it difficult for China's central bank in particular, but also in India and Indonesia, among others. Expect much tighter monetary policy in the region, which has implications for emerging markets performance. We continue to believe investors should not be overweight emerging markets relative to their strategic targets.

In fact, in addition to the fund flows coming out of bonds in reaction to the latest spike in Treasury yields, we think outflows from emerging markets could find their way to US stocks.

We do have some budding concern that there could be some upward pressure on core inflation in the United States, too, but think the implications of rising headline inflation will be felt more acutely in the emerging markets, both economically and socially.

Too much … too few
The late, great Milton Friedman once proclaimed that inflation is best defined as "too much money chasing too few goods." Many are making the "too much money" argument because of the massive liquidity in the financial system. But that money remains stuck in the banking system, as we'll discuss shortly.

Now it's also the "too few goods" argument that is being made because of food shortages. But the real question for US monetary policy is whether the conditions are in place for general price inflation to take hold.

Given the tremendous amount of excess global capacity and limited upside wage pressures, core inflation risk in the developed world remains relatively benign.

The latest core inflation readings are:

• 0.8% in the United States (see chart below).
• 1.1% in the euro-zone.
• -0.7% in Japan.
• Even China's core inflation, though higher than the aforementioned regions, is at a reasonable 2.1%.

Core Inflation in Check … For Now

Source: FactSet, as of December 31, 2010.

Many argue that it's only a matter of time before core levels of inflation begin to heat up, given liquidity overflows. But Bank Credit Analyst (BCA) notes that developed world central banks have not been able to create a "money glut." Money supply (M2) growth in the United States is up, but only 4.3% year-over-year. For the Organisation for Economic Co-operation and Development (OECD) as a whole, broad money is only growing at a 1.2% annual rate. An acceleration would likely put upward pressure on inflation expectations, so money supply growth rates need to be watched carefully.

More velocity needed
In reality, all that developed world central banks have accomplished is to free up reserves in their banking systems, little of which is getting passed through the lending channels to feed into the economy.

This is the concept of the "money multiplier" about which I've written extensively. The math behind what's also called the "velocity" of money is dividing M2 money supply by the overall monetary base (currency in circulation plus banks' required and excess deposits at the Fed).

When it's low as it is presently, core inflation risk is benign. This is one of the key metrics we're watching to see if inflation risk is increasing.

Velocity of Money on Floor

Source: FactSet and Federal Reserve, as of February 4, 2011.

No wage-price spiral in sight
Another precondition for core inflation to erupt is excess wage growth and/or rising unit labor costs. This is the so-called "wage-price spiral" inflation that characterized the late 1970s and early 1980s. As you can see below, neither is highlighting trouble on the horizon.

Muted Wage Pressures

Source: Department of Labor and FactSet, as of December 31, 2010.

No Unit Labor Cost Pressures

Source: Department of Labor and FactSet, as of December 31, 2010.

As BCA points out, wage growth exceeding labor productivity is what triggered the wage-price spiral in the 1970s. In the mid-1970s, the difference between the two was 18%, while today it is barely in positive territory (up from negative territory in 2009).

The tax effect
Let me state the obvious by noting that rising food and energy prices do have an economic impact as they act as a tax on the consumer, which drains discretionary spending power. But as long as wage and unit labor cost growth is in check, there is unlikely to be widespread ability to pass along rising input costs to the end consumer. Rising commodity prices can't create pricing power where it didn't exist before.

That doesn't mean there aren't certain companies and/or industries that are having some success and this bears careful watching. The National Federation of Independent Business survey of small business price plans increased to 19% in January versus its recession low of 0% (it was 30% in 2007).

The airlines also announced price increases last week, along with a couple of large consumer products companies. Finally, University of Michigan's survey of consumer inflation expectations rose to 4.5% in the first half of February versus its recession low of 1.7%.

What would trigger general price inflation?
We are starting to see an increase in bank lending, both for commercial and industrial (C&I) and consumer loans. A more sustained increase would cause the velocity of money to begin accelerating. Frankly, this is a necessity for a sustainable economic expansion, but it would also increase core inflation risk.

In addition, because emerging markets are behind much of the spike in commodity prices, it puts pressure on goods' prices that are transported across borders. Clearly, producers of these goods have incentive to sell into inflating markets, so prices received are higher.

They will likely only sell to US dollar-based consumers if the US dollar price received is commensurate with the price in the inflating emerging markets. This could result in shortages, exacerbated by rumored hoarding, which would mean higher prices absent an increase in the velocity of money.

The hope is that the size dominance of the developed consumer markets versus the emerging consumer markets will prevent sufficient goods to flow to high-inflation markets to significantly increase generalized inflation risks globally.

The China Syndrome
China is at the heart of the inflation scare and bears close monitoring. Given its robust economic growth and excessive credit growth, the risk of food inflation passing through to general price levels is high and rising. It is somewhat tempered by monetary policy tightening and the fall in China's leading economic indicators in reaction.

As BCA notes, if history is any guide, inflationary pressures could crest sooner than later alongside a slowing economy. China's wage growth is about 16% year-over-year, roughly in line with productivity growth in the modern sector. This is the principal reason why core inflation has stayed low.

Fed reaction function
Traditional monetary inflation is not yet spreading in the global economy with limited wage growth not only in the Untied States, but in the G7 more broadly. And G7 productivity growth remains healthy. This should keep developed country central banks largely accommodative.

We do worry the Fed will remain accommodative too long though. As we've noted, we believe the US economy is well past the emergency phase that pushed the Fed to lower short rates to zero.

Expect the criticisms about too-easy monetary policy to persist with every uptick in commodity prices. Cries of the Fed being "behind the curve" will likely get a volume boost this year.

In the shorter term, it's likely the social and economic implications of what we're seeing with commodity prices that will continue to be the big story.

Important Disclosures
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Examples provided are for illustrative (or "informational") purposes only and not intended to be reflective of results you can expect to achieve.

.

America Saves Week: Seven Things You Can Do to Build Your Savings.

by FINRA.org.

February 20-27 was America Saves Week, a national campaign to help individuals and families save and build wealth.

This year, the FINRA Investor Education Foundation, a major supporter of America Saves, is making an international sweep of military installations to provide investing forums to members of the Army, Navy, Air Force, Marines and their families.

Thousands of local and national organizations participate in America Saves events each year. See what’s scheduled in your area, or get started on your own. Here are seven things you can do to get your savings on track during America Saves Week:

1. Check your Financial Capability. Take the FINRA Foundation’s Financial Literacy Quiz, and compare your results to those of your state, region or the nation as a whole.
 

2. Estimate how much you’ll need for retirement. Download our podcast to hear how to estimate the amount of money you’ll need every month to live in retirement. Then run the numbers in our retirement calculator.
 

3. Check on your retirement plan at work. Your employer’s retirement plan provides tax benefits and the opportunity for your savings to compound over time. So it's important to understand every aspect of how your 401(k) plan works. Our Smart 401(k) Investing guide can explain how to get started, review and rebalance your portfolio and take your retirement funds with you when you change jobs or leave the work force. If you’re an employer, learn how to make it easier for your employees to start saving for retirement.
 

4. Spot and avoid investment fraud. Anyone with savings could be a victim of investment fraud. Learn how to spot the common tactics criminals use, plus how to check out a financial professional and the investment that’s being pitched.
 

5. Shop around for financial products. About two-thirds of respondents to FINRA’s National Financial Capability Survey said they did not compare rates when getting their last credit card. But lower interest payments or higher returns could help you save significantly more over time. Find out how to shop for bank products and credit.
 

6. Find an investment professional. If you want help with your finances, you can turn to a financial professional or team of professionals. Learn how to assess the help you need, the types of professionals available to you, what you should ask them and how to check their backgrounds.
 

Start a college savings plan. Despite rising prices, a college education is still within reach for many families, especially those who start saving early for it. Small amounts can grow to significant sums over time thanks to the power of compounding and the tax-advantages that come with many college savings plans. Learn about 529 plans and other savings vehicles.

To receive the latest Investor Alerts and other important investor information sign up for Investor News.

About FINRA:
FINRA.org
The Financial Industry Regulatory Authority (FINRA), is the largest independent regulator for all securities firms doing business in the United States. All told, FINRA oversees nearly 4,800 brokerage firms, about 170,400 branch offices and approximately 643,000 registered securities representatives.

FINRA believes investor protection begins with education. Using the Internet, the media and public forums, we help investors build their financial knowledge and provide them with essential tools to better understand the markets and basic principles of saving and investing.

Teaching Your Teens Money Skills.

by Natalie Pace.

Start Prepping Your Teen Now For Financial Independence.

No matter how rich, middle class or financially strapped you are, once your little darling becomes a teen, you will start feeling like the ATM machine. While holding the purse strings can give you power to impose positive incentives (such as "clean your room and take out the trash to earn your allowance"), if you are making all of the financial decisions in your teen’s life, you are not giving her the skill set she needs to become employable. Below are a few tips to start implementing a Thrive budgeting plan that will provide a solid foundation for your teen’s life as an adult, which is just a few years away.

Teaching Teens the Thrive Budget
My Thrive Budget is outlined in greater detail in my book You Vs. Wall Street.

The power of the Thrive budget is that, in the words of Dr. Gary Becker, who wrote the Preface of my book, You Vs. Wall Street, "Considerable amounts are set aside for basic needs, education, charities, and fun things to do. This may seem obvious, but many people, including educated men and women, need help in making such basic allocations of their resources. They often get into trouble when they neglect to follow simple and fundamental rules of the type provided in this book." Imagine what a leg up your teen has on the world, if you can start making the Thrive budget a daily fiscal habit.

Here are six easy ways to start.

1. Income: Treat any allowance you give your teen as income (i.e. tasks and chores = weekly allowance), and, just like an employer, put 10% of the "income" (allowance) into a bank or brokerage account for your teen. Explain the power of investing to your teen. In a nut shell, if she saves 10% and that earns a 10% return (what stocks and bonds have done over the past 30 years), her nest egg will be bigger than her annual salary in seven years and it will earn more than she does within 25 years. Possible accounts to consider opening for your teen include a Dependent IRA (if your teen is working and earning money on a 1099 or W-2 basis), a custodial brokerage account or a college fund. Have your teen assign goals to the fund, such "Buy My First House" or the "Go to Medical School" fund. You’ll need a name for each fund any way!
   
   
2. Investing: Encourage friends and family to contribute to the brokerage account instead of just giving cash or gifts to your teen on holidays and birthdays. Also, encourage your teen to deposit 10% or more of any cash gifts s/he receives into the fund. Finally, discuss which investments your teen would like to own. Your teen will be far more "invested" in this account if some of the companies s/he invests in are near and dear to her heart. And having an investment means that your teen will become more interested in improving the return by learning even more about business, stocks, real estate, gold, etc.
   
   
3. Charity: Many religious organizations ask teens to give 10% of their allowance to them, an excellent habit to start early. Charity really empowers the individual who gives, so do not underestimate the power and message of helping others with time, talent and money, even if the family funds are tight. In addition to supporting the teen’s favorite charity, consider taking at least one day each year to volunteer with your teen. You’ll be surprised how much fun this can be – whether you are building a house with Habitat for Humanity, cleaning up the beach, collecting holiday gifts for abused children or serving Thanksgiving dinner to the homeless.
   
   
4. Education: 10% should also be going into an education fund. Remind your teen that education is the highest correlating factor with income, and that if s/he wants to enjoy the freedoms of earning a good salary, getting a great education is the first step! Again, this will compound a lot faster if you have a solid investment strategy that earns 10% annually.
   
   
5. Fun: A sustainable amount of "fun" in any budget should be around 20%. This is easy to calculate -- $2 of every $10 earned. If the Buy My First House fund, charity and education dollars are all deposited automatically, that’s the best assurance that money will not be overspent on retail therapy. Also, do fun things on a regular basis with your teen that are free or cost very little. A pickup game of soccer at the local park. Picnics. Go to the museum on the free day. Host a potluck family night with your neighbors. The idea is to associate fun with investing, rather than spending, while at the same time building a greater appreciation for the gifts that money can’t buy.
   
   
6. Basic Needs: Most teens, and even college students, have their basic needs taken care of. However, why not make your teen responsible for her personal items, like shampoo, new clothes (beyond the back to school shopping fest) and snacks? This teaches the teen to search for bargains to stretch the value of their own dollar. The real world is a far better teacher than math games.

With electronic banking, depositing into banking and brokerage accounts and monitoring the investment returns should be fun and easy to do. Essentially, you set it up once and then look at the investments and returns quarterly (not obsessively). Consider taking a few hours every 3-4 months to evaluate the account with your teen. This is as fast and easy as a few clicks on the computer.

A lot of people complain that today’s younger generation wants everything handed on a silver platter, instead of taking the time to teach them the value of earning, investing and fiscal fitness. Make these strategies part of the routine and this becomes the way life is for your teen (instead of something to argue over). If your teen understands that money is earned through income and investments (instead of picked off of your money tree), they are better equipped to do a great job in college and the work force.

About Natalie Pace:
Natalie Pace is the author of You Vs. Wall Street. She is a repeat guest on Fox News, CNBC, ABC-TV and a contributor to HuffingtonPost.com, Forbes.com, Sohu.com and BestEverYou.com. As a philanthropist, she has helped to raise more than two million for Los Angeles public schools and financial literacy. Follow her on http://www.facebook.com/NWPace, and on YouTube.com/NataliePaceDOTCOM. For more information please visit, http://www.nataliepace.com.

Exercise Your Money Muscles.

by Alvin Tam.

Alvin Tam.

This morning, as I was doing an abs-stretching class at the gym, the instructor said something that struck me as profoundly true for exercise as well as any part of life. Every time you work a particular muscle group, you must then work the opposite muscle group. For example, if you are doing ab crunches, then you complete the series with back arches (where you lift your head and legs together).

If you are doing bicep curls, then your next set should be tricep extensions. Each muscle has an antagonistic pair, and they move in harmony – while one works, the other stretches. There is no one without the other – you wouldn’t be able to curl a dumbbell if you didn’t have those triceps on the back of your arms.

What struck me as fascinating is this lesson applies to all areas of your life. Think about how your operate your business or profession. We are generally seduced into thinking that working more, harder, and longer is always better. What is the antagonistic action of working? If you said "not working" you wouldn’t be quite right. Relaxing is not the opposite of business or professional activities – the ethics of the couch potato don’t save us here.

First, consider why you work. Almost everyone works to make money. If they work and don’t make money, either they are in the wrong profession, or it’s called volunteering. When you work, the defining line is being paid. So, the purpose is to make money or create wealth for yourself.

The opposite of making money is giving money or wealth away. Therefore the antagonistic "muscle" in business is practicing generosity. Does it hurt to give money, or donate to a cause? Does it hurt your pocketbook, ego, or make you wince, thinking how you could buy a new pair of jeans instead?

That’s an indication that your "giving muscle" is weak. What that implies is that your creating wealth muscles aren’t operating at full capacity. It takes both actions to balance each other out and create optimal functionality. You need the bicep to make the tricep work and vice versa.

There’s plenty of focus on the wealth creation mindset but little on its equal partner, the wealth giving mindset. Consider what you need to do to balance both muscles.

Bio
Alvin Tam is the founder of Soul Acrobats®, an inspirational products company and Acrofit™, an acrobatic fitness system. He has over 15 years of experience as a circus artist, stuntman, dancer, actor, and coach and has performed for Cirque du Soleil, Notre Dame de Paris, and appeared on CSI. Alvin’s passion is to inspire you to achieve your impossible.

Products
Visit: http://www.soulacrobats.com/products-page/

BOOK: The Art of Impossible

DVD: The Acrofit System Level 1, Expressive Yoga for the Soul

Alvin Tam’s life partner, Jada Fire, also shares her secrets to health and a flexible body and mind in her 60 minute instructional DVD Expressive Yoga for the Soul. Shot and produced by Alvin, Jada takes you on a journey of meditative restoration, invigorating breath work, and beginner-friendly yoga postures. Heal and inspire, with Jada Fire!

To Get Your Copy Visit: www.jadafire.com/store.html

How to Spot Cheapskates, Spendthrifts, Scam Artists and Gamblers (Before You Marry Them).

by Natalie Pace.

If being good at math added up to financial freedom, then accountants would spend April sailing in the Virgin Islands, instead of doing your taxes. So, until billionaire J.K. Rowling (author of Harry Potter) decides to rewrite math textbooks, here are a few tips to help you dodge financial ruin, as you chase down your leprechaun, four leaf clover and pot of gold.

1. Cheap Skates have a Chip on their Shoulder. Cheapskates eat all of the appetizer and then forget to add it to their tab when they insist that everyone pay for exactly what they ordered. You can also expect them to forget to include tax and tip, leaving you to make up the 30% that is missing. It’s your call whether or not you are friends with a cheap skate. But definitely avoid any business here, including the business of marriage, unless you don’t mind getting skated on financially all the time.
   
   
2. Sure signs of a Spendthrift. Throughout my travels as the CEO and founder of the Women’s Investment Network, LLC, I’ve heard many sad stories, but none are more depressing than women and men who have been sold down the river by their spouses or business partners. Some people wake up to find that their own home has been foreclosed on to cover bad investments in high-risk opportunities, and of course credit card debt is the easiest way for retail therapy to become the toxic monster that destroys your life (and marriage). The red flags of spendthrifts begin at first meeting. Does he or she talk incessantly about all of the money they make? (No one ever talks about how much they lose, and very rich people try to avoid the subject of money altogether.) Do you see him or her shopping for big-ticket items that seem far beyond their means? Is he or she driving a car or wearing clothes that are far above the income level? Nothing will kill true love faster than bankruptcy – in a marriage or a business relationship.
   
   
3. Gamblers have shifty eyes, wild ideas, fast tongues and don’t listen. If you like winning, gamblers can be very seductive. But if you take one step back, so that you see the bigger picture, you’ll discover that, despite all the bluster going on, the sure shots and big wins proposed are really full of hot air and bound to pop at the first prick of trouble. If you’ve already fallen in love with a gambler, you might be frustrated to learn that, since they know it all, they don’t really listen to you. Or even if they do care about you (or your business) enough to listen, the information is really going in one ear and out the other, while they continue to be led by their addiction. So, it is important to take the step back and examine before you sign on the dotted line, and start seeing everything through rose-tinted shades.
   
   
4. Shysters and Scam Artists have ‘too good to be true’ claims and no time. Scam artists and shysters prey upon people who are begging for someone to manage their money for them, so that they don’t have to think about it. The most vulnerable are those who can least afford losses, such as lottery winners who have money for the first time in their lives, rock stars, super athletes from the ghetto and elderly people on a fixed income. The hallmark of a scam is that the claims are unbelievable and the amount of time you have to make a decision is just a few days. Oftentimes, the scenario sounds credible enough, though you might wonder why you have been selected to receive this super secret information. However, the more you ask for details, the more you’ll be given the run around, the hard sell or misleading data.

Spendthrifts and gamblers can be very exciting to listen to, and if you’re the one who always reaches for the bill first, you might easily overlook the cheap skate. Scam artists are tempting because you are looking for a Hail Mary solution and Voila! Here it is!

Here’s where friends are great allies. Listen carefully to your friends’ observations of this new business (or marriage) partner before you sign on any dotted line. Read up on the most common investing mistakes and scams in my book, You Vs. Wall Street.

Also, if you are considering a new broker (to help you buy a house or manage your nest egg or anything at all), then by interviewing him/her, you should be able to spot the warning signs. Interview prospective partners as if your life depends upon it because your lifestyle does. I have outlined 12 questions that you should ask any new business partner in my book, You Vs. Wall Street, in the chapter, "Brokers are Salesmen, Not Surgeons."

Come to think of it, these questions could also shed a great deal of light on any date candidates that you are considering marrying.

And no, it's not a good idea to just let your boss' son, or your best friend’s Certified Financial Planner or your ex's lawyer, et al. do everything for you. It is your money -- yours to win or lose. So become the architect of your dream life and take your job seriously as you interview, check the background of and hire contractors (brokers/partners, etc.) to help you realize your vision and goals.

About Natalie Pace:
Natalie Pace is the author of You Vs. Wall Street. She is a repeat guest on Fox News, CNBC, ABC-TV and a contributor to HuffingtonPost.com, Forbes.com, Sohu.com and BestEverYou.com. As a philanthropist, she has helped to raise more than two million for Los Angeles public schools and financial literacy. Follow her on http://www.facebook.com/NWPace, and on YouTube.com/NataliePaceDOTCOM. For more information please visit, http://www.nataliepace.com.

Please note: NataliePace.com does not act or operate like a broker. We report on financial news, and are one of the most trusted independently owned and operated financial news corporations in the U.S. This article is intended to educate and inform individual investors, and, thus, to give investors a competitive edge in their personal decision-making. The publicly traded companies mentioned in this article are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies.   Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a long, safe strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

Information has been obtained from sources believed to be reliable however NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.

Should I Quit My Day Job and Become a Day Trader?

Investors Ask Natalie.

Dear Natalie: I make a great living, love my job and I am rewarded with money and respect. The problem is that I often work 13-hour days, and this, frankly, doesn’t feel like the life of my dreams. With what’s going on in global currency, stock and commodity markets, am I better off focusing on investing than working? I’m already good at investing and getting better at it. I also started an Internet business, which has potential, but I seem to be spending a lot of dough getting started, without any sign of revenue in the near future.

Signed,

Should I Quit My Day Job?

Dear Day Job Rock Star:

It is my belief that earning income at your job and earning passive income are equally important.  As Confucius says, "Choose a job you love, and you will never have to work a day in your life."  So, let's make that the over-riding goal for your "day-job" as an income earner.  It sounds like your day-job might well meet this criteria, You love the job and you are compensated well for it!  That's a big deal.  So, pat yourself on the back for that. 

However, let’s face it, investments, not your day job, are truly your get rich plan. If you invest 10% of your income, and that makes 10% return (which is what stocks and bonds have done over the 30 years), then your assets will be worth more than your annual salary in 7 years and your money will earn more annually than you do in 25 years. Higher returns shorten the window.

Investing, using my easy-as-a-pie chart strategy, and earning 10% or more gains can be as time efficient as setting it up right (you can learn how to set it up at my 3-day Get Rich and Enrich Retreat) and then 8 hours quarterly or annually, when you rebalance your assets (rebalancing and diversifying are key to returns). That leaves a lot of time for active day-trading, if that is a passion of yours. I wouldn’t quit my income until I had a net worth that was sustainable for the rest of my life and I was sure I had a portfolio that earned 10% annually like clockwork. That’s achievable. Only you know if you are there yet.

With regard to the Internet business, you have a lot of soul-searching to do.  If you put up a popular dating site that goes viral and becomes an overnight success, your Internet business could take off like a rocket.  But most businesses take years to build, even if you have a great idea and efficacious marketing strategies.  Competition is fierce and customer loyalty is not won overnight.  Google was founded in 1998 and it didn’t have its IPO until 2004. Facebook has been around since 2004. Great ideas require a whole lot of time and energy and "whatever it takes" mentality. There can be years of cash negative before you hit your big pay dirt – meaning this is more likely to be outflow, not income, for some time.

The truth is that more than half of all new businesses fail. So, don’t quit your day job until you see cash positive in the Internet business. Fun, passion projects can become viable, and if it’s a side thing you do, then it’s less likely to become a money pit.

And now, here’s my crystal ball on commodities and the markets...
Currency Trading: In the worldwide economy, currencies are highly manipulated, and thus, very difficult to make money in over the long term.  This is a very high-risk investment, so approach it as you would any gamble. Bet money you can afford to lose, and if you win, be sure to scoop up your gold and leave the table fast.

Stocks:  This is a pre-election year and we're in the middle of a Spring Rally.  Statistically, the wind is at our backs.  Worldwide events, like the Egyptian and Libyan crises, drag the market down creating buying opportunities. Signs of recovery and investor fatigue of the Great Recession have pushed up share prices over the past year. While stocks in 2011 are expected to rise, the over-riding theme is volatility, so be sure to take your gains early and often. Rebalance your nest egg annually, at minimum.

Global Economy: The developed world is experiencing excessively high debt, and slow growth. The U.S. Federal Reserve’s policy has been (and continues to be) to do whatever it takes to keep the economy chugging along nonetheless, which is largely whey the last decade has seen so many boom and bust cycles (Dot Com, commodities, real estate, banks). Also, it is important that you know how to avoid the Bailout Index and why NASDAQ doubled the Dow in returns over the last two years.  (Come to my Get Rich and Enrich Retreat to learn this and more.)

Commodities, Natural Resources and Basic Materials will continue to be hot.  But you want to buy in at the right price.  As an example, two areas of the world that are rich in commodities and natural resources scored the highest returns in 2009 -- Australia and Latin America.  These areas of the world continue to shine. 

About Natalie Pace:
Natalie Pace is the author of You Vs. Wall Street. She is a repeat guest on Fox News, CNBC, ABC-TV and a contributor to HuffingtonPost.com, Forbes.com, Sohu.com and BestEverYou.com. As a philanthropist, she has helped to raise more than two million for Los Angeles public schools and financial literacy. Follow her on http://www.facebook.com/NWPace, and on YouTube.com/NataliePaceDOTCOM. For more information please visit, http://www.nataliepace.com.

Please note: NataliePace.com does not act or operate like a broker. We report on financial news, and are one of the most trusted independently owned and operated financial news corporations in the U.S. This article is intended to educate and inform individual investors, and, thus, to give investors a competitive edge in their personal decision-making. The publicly traded companies mentioned in this article are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies.   Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a long, safe strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

Information has been obtained from sources believed to be reliable however NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.

Spring Rally. Dive In. The Water’s errr... Hot?

by Natalie Pace.

Take your profits early and often. Includes my Hot News on Cool Stocks Report.

March 1, 2011

General Stock Market Performance

Wall Street Highs/Lows in the New Millennium:

Hot News on Cool Stocks Important Data
Up to 15X gains on U.S. Gold, our 2009 Company of the Year!
NASDAQ Doubled the Dow Jones Industrial Average gains from 2009-2011
NASDAQ Has Outscored Gold since 2009, 69% to 56%
13 out of 14 Company of the Month features from 2010 posted gains. Woo hoo!
Gold tops stocks, real estate, bonds and T-Bills Over the Last 10 Years.

Compare those returns to the returns of stocks, real estate, bonds, Treasury bills and gold over the last 30 years.

Market Update:
Yesterday, someone called, complaining that the stock market was "dropping like a rock." A week ago, another person said that all of the funds they wanted to buy were too expensive -- trading at the 52-week high. What's real?

Even with the market turmoil and Middle East revolutions of late February 2011, NASDAQ is up 4% since Jan. and 70% in the last two years. The mini-correction we had in February wasn’t enough to wipe out the gains we’ve already enjoyed in 2011. At the same time, markets are volatile, meaning the price you desire (within reason) on the buy or sell side, could be just a few weeks away.

It always feels like you are waiting too long, when you want to buy at the right price. And it always feels like you’re losing everything, when the headlines are screaming the Apocalypse. The key is to have a well-diversified portfolio and a systematic (annually at minimum) rebalancing strategy that allows you to make sure that you are capturing gains during the boom cycles and limiting your exposure to busts. Essentially, you employ my easy pie chart and then 1-4 times a year, make sure what you own looks like what you should own. That way, you are always able to benefit from exuberance and protect yourself from catastrophe.

It is a pre-election year, in the midst of the Spring Rally, which, as you can see from the charts below is typically the best time to be in the stock market. With GDP growth in the U.S. at 2.8% in the 4th quarter 2010 and 2011 GDP Growth predicted to be even stronger, with the strong gains in stocks seen over the last two years (34% in the Dow and 70% in NASDAQ) and with the weakness in the muni bond markets, investors are, in general, ready to get back into stocks. Based on this, 2011 is poised to for gains in stocks, as predicted by the monthly and pre-election historical trends (unless there is a major catastrophic event).

Monthly Returns of the S&P500 1985-2009

Source: Standard and Poor’s and NataliePace.com. © 2010

Election Year Trends of the S&P500 1970-2009

Source: Standard and Poor’s and NataliePace.com. © 2010

So, the water’s warm. Dive in (using your pie chart diversification raft). But don’t expect to swim in the ocean without running into a few riptides, hurricanes and sharks. There continues to be a lot of risk on Wall Street.

The water feels scalding hot with the turmoil in the Middle East, and the revolutions in Egypt, Libya, et al. – even more so if you’re watching a lot of television. January and February market returns were definitely impacted by these events, as you can see from the chart below. Both months saw 3-4% corrections that were directly related to headlines, but those corrections were small blips in an overall uptrend.

Diversification and Quarterly Rebalancing
So, how do you get in when NASDAQ is trading near its 10-year high? Industries and companies are performing dramatically differently, and a quick peak at the 3-year trend can be informative. Likewise, determining whether or not you’re dealing with a hot industry or a debt-laden bailout can mean that you limit risk and put more odds of a gain in your favor. (As I point out at the top of this article, and in many other articles over the past five years, NASDAQ is doubling the Dow in returns.)

Sorting through debt and faded blue chips may sound complicated, however, there is an easy-as-a-pie chart system that has worked beautifully for more than a decade through bull and bear markets (illustrated on page 92 of You Vs. Wall Street). And using my 3-ingredient recipe for cooking up profits, filling in the Stock Report Card and asking the Four Questions can help pick the winning companies and hot industries, as well. The easiest way to learn these things is to read You Vs. Wall Street. The fastest way to implement these strategies (in time for the Spring Rally 2011) is to register for and attend the March 11-13, 2011 Get Rich and Enrich Retreat. There are only 4 seats available, so call 310-430-2397 now if you’d like to join us.

At the Get Rich and Enrich Retreat you will learn how to: 1. diversify your nest egg, 2. rebalance once or more a year, 3. use my 3-ingredient recipe for cooking up profits in real estate, stocks, bonds, 4. get safe from bonds and bond funds, 5. Identify the hottest companies, industries and countries for investing, and 6. use limit orders to place your nest egg rebalancing on auto-pilot! Call 310-430-2397 to register now. Deborah, who attended the November 2010 retreat, made back the price of her tuition in just one month! So did Randall. And countless others have written their testimonials as to how the retreat has changed their life forever, and empowered them with the skill set, tools and wisdom needed to invest successfully and reap gains immediately.

Investor Alerts:
1. OPEC: On October 14, 2010, OPEC released a press release stating that they had agreed upon a new "long term strategy." The details of that strategy were scheduled to be released at the December 11, 2010 OPEC meeting in Quito, Ecuador, but were not. OPEC never responded to my inquiry requesting details and/or the summary of the new LTS (which was sent on December 11, 2010). There is speculation that the strategy will be going from the U.S. dollar valuation to a "basket of currency." If that occurs, it will likely be distressing to investors, which OPEC and government leaders are completely aware of. Watch and wait, but definitely be aware of the potential.

2. Debt: Refer to the CIA’s World Fact Book for a listing of debt to GDP ratio by country. The U.S. isn’t in the worst shape, but we are adding to the deficit every year and approaching levels that were problematic for PIIGS (Portugal, Ireland, Italy, Greece and Spain), Japan and other countries. Current debt to GDP (excluding $4.5 billion held by our federal government) was 63.6% in 2010, according to the U.S. Office of Management and Budget.

3. Real Estate: There were 2.9 million foreclosure filings in 2010. Foreclosure filings in 2009 were 2.8 million, with 2.3 million in 2008 and 1.3 million in 2007. 13 million homes could change hands before this real estate correction is over, as foreclosures are predicted to continue apace in 2011 and 2012. This likely means that there will not be much upside in real estate values until beyond 2012. According to a SIGTARP report on January 26, 2011, As of December 31, 2010, a total of 673,919 mortgages were undergoing modification, either permanently or on a trial basis, under HAMP. Of those, 521,630 were active permanent modifications and 152,289 were active trial modifications.

4. 911 Investor Alert: Bonds: Inflation and interest rates have yet to weigh on the bond market (preview of coming attractions), however debt has already begun to take its toll. Don’t be suckered into muni bonds or any other bond before understanding the debt load of the entity and the fiscal health/capacity to make good on the bond. I penned multiple articles and interviewed countless experts in 2010 on bonds. Peruse the archives and read all of them!

5. Gold: The International Monetary Fund will be selling up to 191.3 metric tons of gold on the open market, a policy they announced (and began) in February of 2010. For a brief history of gold and information on which countries are the biggest holders of gold, read, "The Gold Crash of 1980," from the September 2010 ezine, volume 7, issue 9.

So is There Anything Good Out There?
Yes, believe it or not, there are some excellent areas in the economy. My 2009 Company of the Year, U.S. Gold has posted up to 15X gains. 13 out of 14 Companies featured in my Company of the Month articles in 2010 were winners. Your nest egg has almost fully recovered from the Great Recession. If you have a great credit rating and can get a loan, there are areas of the country where you can buy cash positive, low risk income property. And even if you’re in trouble, in doubt, losing a home or declaring bankruptcy, there are some very important things to do to squirrel away as many assets as possible. The best way to learn about these things is to read this ezine top to bottom, read You Vs. Wall Street and register to attend the next Get Rich and Enrich Retreat. Once you have wisdom and education that you should have received in high school, all of this will be easy and can be set up on auto-pilot. Until then, you are vulnerable to more boom/bust markets.

The Get Rich and Enrich Retreat is a great way to have a blast in the sunny beach town of Santa Monica. What a great, empowering vacation! There are only a handful of seats available in this intimate, 12-person, boardroom retreat, so if you’re interested call 310-430-2397 or email Heather@NataliePace.com right away. Get more information on the home page at NataliePace.com under the Get Rich and Enrich Retreat banner ad.

Banks Are Still Failing
There were 157 bank failures in 2010, 140 bank failures in 2009 and 25 in 2008. 22 banks have already failed in 2011 (source: FDIC.gov). Don’t be seduced by the banks reporting record earnings! Most of them are fairy tales. (Nonproducing loans are carried off the books; TARP and other Federal Reserve swaps are about as easy to figure out as the origin of the life.) However, the $600 billion that the Federal Reserve is putting in the mega-bank coffers between November 2010 and May 2011 should help their earnings reports shine up real nice. 13 million homes could be lost between 2007 and 2012 and not all of them hitting the financial statements with as much force as they should...

Track Record of our Reporting
While the markets are still down significantly since their high in October of 2007, the Hot News and Cooling Off lists below have a winning track record before, during and after the Great Recession – in bear and bull market years. 100 positions listed below – 79% -- have delivered impressive gains over the past two years, even while the Dow Jones Industrial Average is still trading lower than it was in 2007 (when it cracked through 14,000)! Only twenty-six of our listings went in the opposite direction of the reporting, which is quite impressive given the market gyrations of more than 7000 point swings since 2008.

Remember that the trading portfolio should be equal to your experience, and should not be part of your nest egg. (The nest egg is money you earn while you sleep, not while you day-trade.) If you’re new, you should be using education or fun money, not your nest egg, to learn on. Take your trading profits early and often in these volatile, whip-sawing years. (Your nest egg is better off just rebalancing once or twice a year, not trying to market time.)

4 out of 7 Company of the Year selections more than doubled.  My 2003, 2004, 2006, 2007 and 2009 Companies of the Year posted up to 9000% gains (Taser), up to 690% gains (Opsware), up to 215% gains (Suntech Power Holdings), and up to 15X ROI for U.S. Gold, respectively. MySpace, my 2006 Company of the Year, was a large part of News Corp’s success with shareholders that year.   So five out of seven Company of the Year selections were superperformers. That’s the kind of record that puts you on top on Wall Street.  (I launched my first publication on 11.15.02, and featured the first Company of the Year, Taser International, on 1.1.03.)

Some of my best picks include: U.S. Gold (UXG) 15X return on investment, Google (GOOG) +585%, Opsware (OPSW) +690%, Rio Tinto (RTP) +145%, Sohu (SOHU) +150%, Suntech Power Holdings (STP) +107%, Taser (TASR) up to 9000% gains. 13 out of 14 companies featured in the Company of the Month articles in 2010 earned gains – 93%!

The NataliePace.com ezine was the first to list the following 911 alerts:

1. Muni bond and bond funds 911 Investor Alert in Sept. 2010.
2. 2008 Recession (Get Safe)
3. Trim back on Faded Blue Chips in 2006
4. Get out of Dodge (real estate) in 2005
5. Google at the IPO! (May 2004)
6. To get Fannie Mae and Freddie Mac out of your 401(k) in 2003

Market Movers:
The Federal Open Market Committee and Monetary Policy
The Fed funds rate continues to be "0 to ¼ percent." The next FOMC meeting takes place on March 15, 2011.
GDP Growth Rates: Second estimates of 4^th quarter 2010 GDP growth came in at 2.8% (down from advance estimates of 3.2%). 3rd estimates will be released on March 25, 2011 at 8:30 a.m. ET. Final GDP growth rate for 3Q 2010 was 2.6%. 2Q 2010 GDP growth was 1.7%.  1Q 2010 GDP growth was 3.7%.
These release days tend to be very active on Wall Street.  For more information on GDP growth and other important economic statistics, go to the BEA.gov website and be sure to visit the NataliePace.com calendar section often.

EDUCATIONAL OPPORTUNITES AND INFORMATION:

The tentative FOMC meeting schedule for the 2010-2011 calendar is: March 15, 2011 (Tuesday), April 26-27, 2011 (Tues.-Wed.), June 21-22, 2011 (Tues.-Wed.), August 9, 2011 (Tuesday), September 20, 2011 (Tuesday), Nov. 1-2, 2011 (Tues.-Wed.), December 13, 2011 (Tuesday), January 24-25, 2012 (Tues.-Wed.).

2. Calendar Section: Conferences, Online Chats and more: Check out the Calendar section of NataliePace.com regularly. You will find great opportunities to attend the most exclusive business and Green Conferences, learn about upcoming TV and radio shows and other educational opportunities – many are FREE! Get more information on how to best use our articles in the FAQs article, located under the Investor Edu link on the home page of NataliePace.com.

Don’t miss the Pace and Prosperity Show with Natalie Pace on BlogTalkRadio.com. Check BlogTalkRadio.com/NataliePace for upcoming shows and call-in and log-on instructions and to listen back to any shows that you might have missed. These shows are pod casts and are FREE!

BlogTalkRadio offers a Q&A format, where you can call in with your most pressing questions. Be sure to keep a list of your questions as they come up, and join our ongoing dialog on peace and prosperity, getting rich and enriching, green investing, the Thrive Budget and more on Facebook at http://www.facebook.com/NWPace.

3. Survey Results: Each month we have three new surveys so that we can stay in touch with your needs and desires. This month, we want to know about your broker experience. Do you love your broker, or did your nest egg crack? Cast your vote on our survey page.

4. Euro interest rates: ECB rates are at 1.00% (main refinancing), 1.75% (marginal lending) and 0.25% (deposit facility). The next meeting and interest rate announcement are scheduled for March 3, 2011 at 2:30 p.m. CET. (March 17, 2011 after that.)

Hot Stocks List
Investors who "never pay retail," note that the BOLD highlighted stocks are trading at their 52-week lows or near the price featured in NataliePace.com’s article. This may be a good buying opportunity. (If the stocks are not highlighted, then in our estimation, this is not a good time to buy. Reasons are explained in the news commentary.) The companies that are listed below which are not highlighted may not be in a good buying range, but they appear to be poised to continue performing well (if you have already purchased them). There are never any guarantees in life, and all stocks are risk-based investments. Consult your certified financial planner before making any changes to your investment strategy. And remember that these "Stocks on Steroids" are not intended to be part of your nest egg strategy at all – not even for "pros." If you’ve never traded individual stocks before, this is your "fun" or "education" money. You should not stake your future on anything that you don’t have mastery over.

Hot News List (highlighted).  Be sure that you are buying low.
American Superconductor (AMSC) added 2.14.11
AOL (AOL) added 2.14.11
Satcon (SATC) added 3.1.11

Profit-Taking:
LDK Solar (LDK) +284%
U.S. Gold (UXG) 14.5X ROI (See comments below)

DELETIONS (Take your profits early and often):
BEARX (The Bear Market Fund) on 2.2.11
U.S. Gold (UXG) 2.14.11 (moved to the Watch List)

HOT NEWS on COOL STOCKS LIST

Deleted Companies 2008-2011:
Echelon +20%, GE, +13% and +18%, Google, +15% and +31%, Johnson & Johnson +10%, LDK Solar +18%, Microsoft +12%, Satcon +13%, Suntech +35%, Trina Solar +22%, World Water & Solar +22%. Genentech (8.1.08) +40%. Altair (deleted on 8.7.08) posted gains of +3% and +57%. Zoltek (deleted on 8.18.08) lost 30% before being removed. LDK Solar was deleted on 9.2.08 with 46% and 29% profits. U.S. Gold profit taking on 11.6.08 amounted to 72% gains. Conergy gains of 51% were taken on 11.7.08. American Superconductor posted 50% gains between 12.1.08 and 1.14.09. MEMC Electronics (WFR) had 21% gains between 12.1.08 and 12.15.08. STP had gains of 69% between 12.1.08 and 1.2.09. SQM profits 20% on 1.14.09. WWAT was deleted on 2.1.09 with -62% losses. On 2.15.09, AMSC had gains of 65%, MEMC Electronics 26%, Sociedad de Quimica y Minera 48% and U.S. Gold 432%. Citigroup gains of 42% on 3.15.09. Genentech was deleted on 3.15.09 with gains of 29%. OSI Pharmaceuticals was deleted on 3.15.09 with 7% gains. Rio Tinto was deleted on 3.27.09 with gains of 67%. On 3.27.09, the following companies were in the money: ALTI (+48%), AMSC (+51%), eBay (+24%), GE (+40%), HOKU (+38%), LDK (+46%), MEMC (+44%), PBW (+35%), SATC (+42%), SQM (+76%), STP (+211%), TSL (+207%), U.S. Gold (+456%) and WBK (+25%). Profit-taking 4.13.09: ALTI +209%, AMSC +70%, HOKU +32%, LDK +64%, PBW +42%, SQM +42%, UXG+418%. Deleted 4.13.09: eBay, +45%, Eurox -11%, GE +47% & -56%, Google +9%, Maxwell +25%, MEMC Electronics -33% & +49%, Microsoft +24%, SATC +67%. STP +262% & -64%, TSL +216% & -67%, Westpac +42% & -22%. Deleted 5.4.09: FMC Corp. with 19% gains. PZD with losses of -39%. SPWRA with 19% gains. TREMX with 50% losses. WSDT with losses of -59%. Deleted 5.15.09: SQM with gains of 38% and 62%. Deleted 5.31.09: EMKR with losses of 13% and 88% and Melco with losses of 8%. Ener1 with gains of 11% and 17%. Deleted 7.20.09: Conergy with losses of -52-98%. Deleted Smith and Nephew on 8.15.09 with gains of 17% and losses of 28%. Deleted the New Zealand dollar currency ETF by Wisdom Tree with 36% gains on 12.12.09. 12.18.09: Deleted Ener1 with 22% gains and Satcon with 29% gains. Deleted 1.11.10: KCI with 88% gains! Deleted 8.1.10: Galaxy Resources with 48% and 9% returns and Rio Tinto with 21% gains. Deleted 9.13.10: American Superconductor (flat) & AOL (flat). 10.1.10: Blockbuster busted out in bankruptcy on 9.28.10. KLAC was deleted with 11% gains. 10.15.10: ENER1 was deleted with flat performance. 11.11.10: ENER1 was deleted with 37% gains. VECO was deleted with 2% & 41% gains. 12.1.10: KLIC was deleted with 12% gains. 1.14.11: Advanced Materials was deleted with 30% gains. 2.2.11: BEARX with losses of 14%. 2.14.11: U.S. Gold with 14.5X gains.

Recently Deleted from the Hot News list:
BEARX on 2.2.11
U.S. Gold (UXG) on 2.14.11

Stocks to Watch
Some of these are great companies that we’re thinking of adding to the Hot List and some are stinkers we’re thinking of adding to the Cooling Off List.  Read carefully to identify which is which! Note that right now most of our favorite companies are on the Watch List. Getting the price right is as important as picking the right company. Never pay retail!

Recent Additions:
BEARX, the Prudent Bear Fund on 2.2.11
iShares Chile Fund (ECH) on 2.14.11
Oracle (ORCL) on 2.1.11
Sears (SHLD) on 3.1.11
iShares PHLX SOX Semi-conductors (SOXX) added on 2.14.11
Shutterfly (SFLY) on 3.1.11
U.S. Gold (UXG) on 2.14.11

Recent Deletions:
American Superconductor (AMSC) (moved to Hot List on 2.14.11)
Altair Nanotechnology (ALTI) removed 2.14.11
AOL (AOL) (moved to Hot List on 2.14.11)
ENER1 (HEV) (moved to Hot List on 1.14.11)
Cree (CREE) (moved to Hot List on 1.20.11)
PowerShares Emerging Markets Index (PIE) on 2.14.11
Shutterfly (SFLY) moved to Cooling Off list on 2.14.11

Cooling Off Stocks List (may be Poised for a Decline in Share Price).
Note: The companies listed in bold have recently been added to this cooling off list and/or may be currently poised for a decline in value. Investors who have them in their portfolio should read the recent news and consider whether it is time to sell and take profits, dump losses, short the position and/or simply weather the storms, while keeping the company in their long-term portfolio. At any rate, always consult your certified financial partner before making adjustments to your portfolio. (Again, note that the stocks on this chart are expected to go DOWN in price.)

ALERT: We are in the middle of the 2011 Spring Rally. Not the best time to initiate new short positions, outside of shorting the Bears and muni bonds. Many of the NASDAQ stocks on the list are here simply to keep you from buying them high.

Highlighted Companies (Cooling Off List):
BAIDU (BIDU)
Capital One (COF)
PIMCO Municipal Bond Fund (MUNI)
Netflix (NFLX)
Taubman (TCO)

DELETIONS:
Sears (SHLD) on 3.1.11
Shutterfly (SFLY) on 3.1.11

IMPORTANT DISCLAIMER (PLEASE READ):
Please note: NataliePace.com does not act or operate like a broker. We report on financial news, and are one of the most trusted independently owned and operated financial news corporations in the U.S. This article is intended to educate and inform individual investors, and, thus, to give investors a competitive edge in their personal decision-making. The publicly traded companies mentioned in this article are not intended to be buy or sell recommendations. ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies.

Investors should NOT be using the Hot News on Cool Stocks list or the Cooling Off list to trade their nest eggs. Your retirement plan should reflect a long, safe strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.

IMPORTANT DISCLAIMER: Information has been obtained from sources believed to be reliable however NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.

NataliePace.com Calendar:

Attend a Forum with Academy-Award Winning Producer Peter Guber. The Milken Global Conference. And more.

The NataliePace.com Calendar section features conferences, teleconferences, retreats, educational opportunities, cultural events, galas, market events and online chats with executives and VIPs. Stay plugged in! We add online chats, article updates, teleconferences, etc. as they are booked, so be sure to visit the calendar section early and often.  Below is only a partial listing of what’s happening this month.

To access links to the event website and registration, go to the Calendar section at NataliePace.com.

McEwen Capital Reception
Tuesday, March 8th, 2011
5:00PM through 8:00PM
Join the CEO and chairman of U.S. Gold Rob McEwen at the Fairmont in Toronoto, Ontario for the annual McEwen Capital 2011 PDAC reception.

Jonas Kaufman in concert. LA, CA
Friday, March 11th, 2011
7:30PM through 11:00PM
Born in Munich, tenor Jonas Kaufmann is now internationally recognized as one of the most important artists of our day.

Get Rich and Enrich Retreat. Santa Monica, CA
Friday, March 11-13, 2011
You spend hundreds of thousands learning how to earn money. Why not spend a fraction of that learning how to invest? 3 days in a boardroom setting, learning investing directly from Natalie Pace. March 11-13, 2011.

The Turn of the Screw. LA, CA
Saturday, March 12th, 2011
7:30PM through 11:00PM
Benjamin Britten's mesmerizing score brings an unforgettable Henry James classic to the opera stage at Los Angeles Opera.

FOMC Meeting
Tuesday, March 15th, 2011
The Federal Open Market Committee meets to determine Federal Reserve policy in the U.S.

Spring Equinox
Sunday, March 20th, 2011
The official beginning of Spring!

GDP 4Q 2010 (3rd Est.)
Friday, March 25th, 2011
8:30AM through 8:45AM ET
The U.S. Dept. of Commerce, Bureau of Economic Analysis (BEA.gov) releases its 3rd estimate on GDP growth in the 4th Q of 2010.

Forum with Film Legend Peter Guber, Santa Monica, CA
Tuesday, March 29th, 2011
4:30PM through 6:00PM
Filmmaker Peter Guber is an expert storyteller, responsible for such award-winning films as Midnight Express, The Color Purple, Gorillas in the Mist, Batman and Rain Man. Join Peter Guber in an intimate forum as he discusses his latest book, Tell to Win.

Passover
Monday, April 18th, 2011
April 18-26, 2011.

Easter
Sunday, April 24th, 2011

FOMC Meeting
April 26-27, 2011
The Federal Open Market Committee meets to determine Federal Reserve policy in the U.S. Two-day meeting April 26-27, 2011.

Milken Global Conference
May 1-4, 2011
Presidents, CEOs, VIPs, Nobel Prize winners, academics, policymakers. Participants don’t just debate the issues — they help move policy toward realistic solutions in energy, economics, health and more.

NOTICE: NataliePace.com is NOT a stock brokerage service, and does not operate or act as one.